UK government’s announcement that it will introduce a £1.5bn funding pot to support Covid -hit companies struggling with business rates is a step in the right direction to give a lifeline for them at a time the UK economy is in recession following the global pandemic and costly Brexit.
The new fund was designed to cover the sectors other than the retail, leisure and hospitality with the taxes they pay based on the value of the premises the business establishments occupy.
The request for the reduction of the rate bill comes following the UK economy experienced the worst ever recession for 300 years.
Eligible firms in diverse areas of the UK economy in the form of pubs, bars, restaurants, shops and hotels, have been able to access 100% rates relief. However, the impact of the pandemic went far beyond these areas, and the government has also received about 170,000 claims from companies requesting “material change of circumstance” (MCC) reductions on their rates bills.
Considering the backlog of claims, the ministry has decided to reject all MCC claims and to support the companies with new fund. The local authorities will administer the fund and decide on the eligibility of recipient businesses and priority will be given to hart-hit sectors.
It would also avoid momentous amounts of taxpayers’ support going to businesses to be able to operate as usual during the pandemic, and also steps will be taken to avoid the cash disproportionately allocation to particular regions such as London.
The plan may run into controversy, if it fails to support those business that sought MMC reduction.
Business leaders cautioned that although many firms indirectly hit by Covid restrictions could receive support, other businesses struggling still may run the risk of being completely left out in the cold.
Rain Newton-Smith, the CBI’S chief economist, said: “It’s a tricky balance to strike, but other firms whose revenues have been hard hit by the crisis will certainly be highly frustrated that their appeals for discounts will be null and void now.”
The chancellor, Rishi Sunak, said the government’s priority was to get cash quickly and fairly to firms who needed it most. He said, “By providing more targeted support than the business rates appeals system, our approach will help protect and support jobs in businesses across the country, providing a further boost as we reopen the economy, emerge from this crisis and build back better,”
Hopefully the chancellor would revisit the plan and may address the residual issues following the implementation of the scheme. What matters at the end of the day is, irrespective of the strategies, to protect both businesses and employments so that these steps would help speedy recovery of the economy, while making wealth as well as creating a host of new business opportunities.
